The decline and fall of Bombardier

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Introduction

May 6, 2019, © Leeham News: Bombardier was once the leader in providing regional airliners to the industry.

Today, it’s all but exited the industry.

With the announcement that its Belfast manufacturing facility and a smaller one in Morocco are for sale, only the CRJ regional airliner remains.

Expectations are that that, too, will be gone before too long. Bombardier has been weighing its “strategic options” of the CRJ since last year, when it agreed to sell the Q400 turboprop to Canada’s Viking Air. This deal is to close mid-year.

Here’s a look back how Bombardier went from a leader to an also-ran.

Summary
  • Bombardier pioneered the regional jetliner and dominated the turboprop sector.
  • Embraer surpassed the former and ATR the latter.
  • A bold move to jump into the lower end of the market dominated by Airbus and Boeing, coupled with bad management and over-extending the balance sheet, nearly bankrupted the company.

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Pontifications: Rebuilding the MAX and Boeing brands

By Scott Hamilton

May 6, 2019, © Leeham News: Boeing has a big job ahead of it to restore faith in the 737 MAX with flight crews and the flying public.

Recertification is still weeks or perhaps months away. The return to service may be anywhere from July to August or even longer, depending on how global regulators proceed with review and approval of the revised MCAS software and pilot training.

Pilots at airlines seem split whether a “simple” computer training protocol is sufficient or whether a flight simulator training is required.

Let’s set all this aside on the safe assumption this will work itself out, whether sooner or later.

So, the question then becomes: how does Boeing repair the MAX brand—and its own.

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Bjorn’s Corner: Bombardier selling off unique CSeries technology

By Bjorn Fehrm

May 06, 2019, ©. Leeham News: Bombardier’s CEO, Alain Bellemare announced yesterday the company will streamline to a Train and Business jet company.

This means there is no longer place for a Commercial aircraft division nor its Aerostructures parts in Belfast and Morocco serving these aircraft.

Figure 1. The CSeries/A220 Carbon Fiber Reinforced Polymer (CFRP) wing. Source: Bombardier.

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Bombardier to sell Belfast wing factory, dumping key parts of profitable Aerostructures unit

May 2, 2019, © Leeham News: Bombardier today reported its first quarter earnings, which were lower than originally expected by analysts and previewed last week.

But the big news are plans to sell its Belfast, Northern Ireland, wing factory and its aerospace facility in Morocco.

The Belfast plant produces wings for the Airbus A220 (nee C Series). This plant and the Morocco facility were reorganized previously into an Aerostructures unit that has been profitable.

Bombardier now labels these plants as non-core to its business.

The CRJ program, which is for sale, has been put into a new Bombardier Aviation business unit that includes the business jets.

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Boeing customer compensation for MAX already at $1bn and climbing, estimates aviation lawyer

May 2, 2019, © Leeham News, New York: Boeing faces huge claims from airlines with grounded 737 MAXes, the amount of which will depend on the time the airplanes are out of service, an aviation lawyer tells LNA.

The lawyer, who is not involved in any litigation from the Lion Air and Ethiopian Airlines MAX 8 crashes, has reviewed scores of Boeing purchase contracts in the ordinary course of his practice. It’s based on terms and conditions under the Service Life clause that he concludes Boeing could face about $1bn in claims for a grounding lasting five months—or until mid-August, as three key US airlines estimate before the MAX returns to service in the US.

The amount climbs the longer the groundings are in place but could be smaller if the global grounding is lifted sooner.

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MAX impact on Boeing NMA beginning to emerge

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Introduction

May 2, 2019, © Leeham News: There was indication last week Boeing’s decision on whether to approve the New Midmarket Airplane program will slide.

CEO Dennis Muilenburg said on the company’s first quarter earnings call the focus is returning the grounded 737 MAX to service.

A decision on authorizing the sales force to offer the NMA for sale is ambiguous. For the first time, targeting 2025 for entry into service appears to be acknowledged as iffy.

The statements confirm LNA’s analysis and our reports that the 2025 EIS is unlike.

Summary
  • Advanced manufacturing is key to NMA production, but all elements need to fall into place—a “production moonshot.”
  • For more than a year, LNA and others predicted the NMA EIS in 2025 is not possible.
  • Engines won’t be ready by 2025 EIS. See here and here from March 2018.
  • Latest woes from CFM on the LEAP add to uncertainty; CFM is the favorite for NMA. See here.
  • Engine selection by Boeing put off until after MAX problems solved, grounding lifted.
  • Authority to Offer for sale at Paris Air Show unlikely and 2025 EIS now in doubt.

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Ascend takes a close look at MAX values, future

April 30, 2019: Aviation consultancy Ascend took a close look at the Boeing 737 MAX in a 30 minute Youtube video.

The consultancy begins and ends the video talking about other airplanes, but the middle focuses on the MAX, lease rates, values and considerations about the grounding.

The video is below.

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Boeing suppliers ramp up schedule for MAX: 52/mo by July, 57/mo by August

Source: Boeing.

April 29, 2019, © Leeham News: Boeing reduced the production rate on the 737 line in mid-April from 52/mo to 42/mo in response to the grounding of the airplane by regulators worldwide.

The company and others said they didn’t know how long the airplane would be grounded.

But Boeing told suppliers to keep producing parts, components and the fuselage at rate 52.

The announcement was made April 5. At the same time, Boeing gave suppliers the rate ramp-up schedule.

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Impact of MAX grounding emerges with earnings reports

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Introduction

April 29, 2019, © Leeham News: With first quarter financial results beginning to be reported, the impact of the grounding of the Boeing 737 MAX is beginning to emerge.

Boeing 737 MAXes stored at Everett Paine Field. Photo by Jennifer Schuld.

The first out was from Boeing itself, followed by a few of the airlines that operated the MAX before it was grounded March 13.

Boeing reported the grounding cost it about $1bn, for just the two weeks the airplane has been on the ground.

Norwegian Air Shuttle, which was using the MAX on new trans-Atlantic services, lost millions of dollars.

American Airlines will take a $350m hit from the groundings.

Southwest Airlines surprised many with a stronger-than-expected first quarter despite having 34 MAXes on the ground and a cost of $200m.

Air Canada extended the removal of its MAX fleet from its schedules another month, to Aug. 1.

Summary
  • JP Morgan doesn’t predict deliveries resuming until the fourth quarter.
  • The investment bank sees 200 MAXes in inventory accumulating and cash losses of $1.5bn per month while the plane is grounded.
  • Wall Street hopes that 2020 will be a normalized year.
  • If simulator training is required by regulators before the MAX can return to service, JP Morgan estimates more than 4,400 pilots need to be trained.

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Pontifications: “We own it, but…”

By Scott Hamilton

April 29, 2019, © Leeham News: Boeing got roundly thumped for blaming the pilots in the Lion Air flight 610 crash involving the 737 MAX last October.

It took months before Boeing CEO Dennis Muilenburg issued a video in which, among other things, he said, “We own it.” He was referring to safety of the MAX.

This was widely interpreted as Boeing stepping up and taking responsibility for at least some of the causes of the Lion Air and Ethiopian Airlines crashes.

Last Wednesday, he took it all back.

On the first quarter earnings call, Muilenburg denied there was any “technical slip or gap” in designing the now famous MCAS system. He said “actions not taken” contributed to the crash, a thinly veiled reference once again to pilot error. (More on this below.)

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